Stock Analysis

Institutional investors may adopt severe steps after Precision Drilling Corporation's (TSE:PD) latest 16% drop adds to a year losses

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Key Insights

  • Institutions' substantial holdings in Precision Drilling implies that they have significant influence over the company's share price
  • The top 25 shareholders own 49% of the company
  • Insiders have been selling lately

If you want to know who really controls Precision Drilling Corporation (TSE:PD), then you'll have to look at the makeup of its share registry. The group holding the most number of shares in the company, around 57% to be precise, is institutions. Put another way, the group faces the maximum upside potential (or downside risk).

And institutional investors saw their holdings value drop by 16% last week. Needless to say, the recent loss which further adds to the one-year loss to shareholders of 16% might not go down well especially with this category of shareholders. Often called “market makers”, institutions wield significant power in influencing the price dynamics of any stock. As a result, if the downtrend continues, institutions may face pressures to sell Precision Drilling, which might have negative implications on individual investors.

Let's delve deeper into each type of owner of Precision Drilling, beginning with the chart below.

View our latest analysis for Precision Drilling

TSX:PD Ownership Breakdown March 16th 2023

What Does The Institutional Ownership Tell Us About Precision Drilling?

Institutional investors commonly compare their own returns to the returns of a commonly followed index. So they generally do consider buying larger companies that are included in the relevant benchmark index.

We can see that Precision Drilling does have institutional investors; and they hold a good portion of the company's stock. This implies the analysts working for those institutions have looked at the stock and they like it. But just like anyone else, they could be wrong. It is not uncommon to see a big share price drop if two large institutional investors try to sell out of a stock at the same time. So it is worth checking the past earnings trajectory of Precision Drilling, (below). Of course, keep in mind that there are other factors to consider, too.

TSX:PD Earnings and Revenue Growth March 16th 2023

Institutional investors own over 50% of the company, so together than can probably strongly influence board decisions. We note that hedge funds don't have a meaningful investment in Precision Drilling. FMR LLC is currently the largest shareholder, with 4.9% of shares outstanding. Encompass Capital Advisors LLC is the second largest shareholder owning 4.3% of common stock, and National Bank Investments Inc. holds about 4.0% of the company stock. Additionally, the company's CEO Kevin Neveu directly holds 1.2% of the total shares outstanding.

A deeper look at our ownership data shows that the top 25 shareholders collectively hold less than half of the register, suggesting a large group of small holders where no single shareholder has a majority.

While studying institutional ownership for a company can add value to your research, it is also a good practice to research analyst recommendations to get a deeper understand of a stock's expected performance. There are a reasonable number of analysts covering the stock, so it might be useful to find out their aggregate view on the future.

Insider Ownership Of Precision Drilling

The definition of an insider can differ slightly between different countries, but members of the board of directors always count. The company management answer to the board and the latter should represent the interests of shareholders. Notably, sometimes top-level managers are on the board themselves.

I generally consider insider ownership to be a good thing. However, on some occasions it makes it more difficult for other shareholders to hold the board accountable for decisions.

Our most recent data indicates that insiders own some shares in Precision Drilling Corporation. In their own names, insiders own CA$22m worth of stock in the CA$893m company. This shows at least some alignment. You can click here to see if those insiders have been buying or selling.

General Public Ownership

With a 40% ownership, the general public, mostly comprising of individual investors, have some degree of sway over Precision Drilling. While this size of ownership may not be enough to sway a policy decision in their favour, they can still make a collective impact on company policies.

Next Steps:

It's always worth thinking about the different groups who own shares in a company. But to understand Precision Drilling better, we need to consider many other factors. For example, we've discovered 1 warning sign for Precision Drilling that you should be aware of before investing here.

But ultimately it is the future, not the past, that will determine how well the owners of this business will do. Therefore we think it advisable to take a look at this free report showing whether analysts are predicting a brighter future.

NB: Figures in this article are calculated using data from the last twelve months, which refer to the 12-month period ending on the last date of the month the financial statement is dated. This may not be consistent with full year annual report figures.

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